Mobile DRAM heading towards low-profitability era

With the rising popularity of smartphones and tablet PCs, DRAM makers are eagerly expanding mobile DRAM capacity, which not only improves profitability but lowers risk from commodity DRAM production as well, according to TrendForce.

"Smartphone shipments are forecasted at 14.80 crore for Q2, a 48 per cent yoy increase. As for hardware specifications, quad-core chips, Android 4.0 (ICS) and LTE are in the spotlight this year, further increasing smartphone market share and mobile DRAM demand."

Korean DRAM manufacturers have a strong foothold on the mobile DRAM market, the research firm states. Samsung and Hynix's combined revenue encompasses 70 per cent of the mobile memory market, and the makers are expected to begin mass producing LPDDR3 in the second half of this year. The new product will be used not only in smartphones and tablet PCs, but ultrabooks as well.

"Although concerns over Elpida's bankruptcy protection filing have not yet dissipated, the Japanese maker is actively working on mobile DRAM production to increase turnover and market share. Elpida's LPDDR3 schedule is only slightly behind that of the Korean suppliers. As for Taiwanese makers, currently there is one supplier manufacturing LPDDR2 8Gb on the 3xnm process – hopefully they will be able to grab a share of the market from the mobile memory leaders."

TrendForce indicates, 4Gb-8Gb is enough to meet memory requirements for Android 4.0 and Windows 8. In the next 6 to 9 months, even if smartphone content per box does not increase, because Q2 shipments were better than expected (an 8.8 per cent QoQ increase), demand will show a rising trend.

As the commodity DRAM market continues to be in a state of oversupply, DRAM makers are gradually reallocating capacity to speciality DRAM products. As a result, DRAM contract price has risen to the current price of Rs.1,020.41 ($20). However, in terms of cost structure, staying profitable remains a challenge.

"Turning to mobile DRAM is a logical option, but with so many makers jumping on the bandwagon, Q2 mobile DRAM contract price has fallen by 10-15 per cent QoQ. Even if DRAM manufacturers continue to shrink process technology and increase yield rate to lower cost, mobile DRAM price and profitability will quickly approach that of commodity DRAM – mobile memory is inevitably headed towards an era of low profitability."

What is DRAM?
Dynamic random access memory (DRAM) is a type of random access memory that stores each bit of data in a separate capacitor within an IC. Since real capacitors leak charge, the information eventually fades unless the capacitor charge is refreshed periodically. Because of this refresh requirement, it is a dynamic memory as opposed to SRAM and other static memory. And unlike non-volatile firmware chips, both DRAM and SRAM lose their content when the power is turned off.